There’s a story of a proposed bike path in Los Angeles that met opposition from NBC Universal, which had a production studio in the area. Several Universal executives apparently feared the path would be used by aspiring screenwriters to toss unsolicited scripts into the studio parking lot. 1Steve Hymon and Andrew Blankstein, Studio poses obstacle to riverfront bike path, LA Times, Feb 27, 2008.

True or not, companies in the creative fields are typically wary of accepting unsolicited ideas. It’s not uncommon for successful projects to be met with claims of “idea theft” — recent examples in the news include Ugly Betty, Alien vs. Predator, and Premium Rush.

That list also includes the Syfy program Ghost Hunters, produced by Pilgrim Films in partnership with NBC Universal. Last May, in Montz v. Pilgrim Films & Television, the 9th Circuit reversed the district court’s decision to dismiss claims that the studio had taken the idea for the show from someone else without compensation. Now, the studios have asked the Supreme Court to reverse.

Ghost Hunters

This story begins in 1981, when parapsychologist Larry Montz came up with an idea for a TV show that followed paranormal investigators as they looked for evidence of paranormal activity in real-world locations. Montz and his publicist pitched the idea to several studios from 1996 to 2003, including NBC and the Sci-Fi channel. All the studios passed on the idea.

The Sci-Fi channel, however, eventually premiered Ghost Hunters, a TV show that followed a team of paranormal investigators to real-world locations looking for signs of ghosts. Montz sued the producers of Ghost Hunters in 2006, along with NBC Universal (which had partnered with the producers of the show), claiming that they had based the show on his idea.

Montz specifically claimed that he had pitched the idea to the producers under the condition that he would be compensated if they used it. By creating a show based on his idea without paying him, the studios breached an implied-in-fact contract with Montz.

The district court dismissed the state claims on the grounds that they were preempted by federal copyright law. On appeal, the 9th Circuit affirmed. 2Montz v. Pilgrim Films & Television, 606 F.3d 1153 (2010). But then the Circuit ordered a rehearing en banc. It reversed the lower court’s holding, finding that Montz’s implied-in-fact contract and breach of confidence claims were not preempted by the Copyright Act.

It is this decision that is being appealed to the Supreme Court.

Idea/Expression Distinction

Before looking at the details of copyright preemption, I think it’s worthwhile to take a look at one of the broader issues raised by this appeal — the idea-expression distinction.

Copyright protection extends not to physical objects, but to the immaterial aspects conveyed by those objects in the form of words, images, sound, etc. But the scope of copyright protection is limited even further. William Blackstone, describing copyright in his seminal Commentaries on the Laws of England (1765), distinguished between sentiment and language; today we use the terms idea and expression to make the same distinction. Copyright gives authors exclusive rights in their expression, but the ideas conveyed in any given work are free to all.

The cert petition explains the importance of this distinction:

For more than a century, it has been settled law that “[n]o author may copyright his ideas.” This is, indeed, “[t]he most fundamental axiom of copyright law.” Even before the Copyright Act of 1976, therefore, only an author’s expression could be copyrighted: The “general rule of law” was “that the noblest of human productions” — including “ideas” — “become, after voluntary communication to others, free as the air to common use.”

The Copyright Act of 1976 retained this longheld distinction between ideas and expression: Section 102 expressly declines to “extend [copyright protection] to any idea,” “regardless of the form in which it is … embodied in [a] work.” [Citations removed].

Since the Copyright Act of 1976, the Supreme Court has held that the idea-expression distinction has another important purpose: serving as one of copyright’s “built-in free speech safeguards.” Distinguishing between ideas and expression “strike[s] a definitional balance between the First Amendment and the Copyright Act by permitting free communication of facts while still protecting an author’s expression.” 3Eldred v. Ashcroft, 537 US 186, 219 (2003), quoting Harper & Row v. Nation Enterprises, 471 US 539, 556 (1985).

Federal Preemption of Copyright Claims

By the time the US Constitution was drafted, twelve of the thirteen colonial state governments had copyright laws. 4William Patry, Copyright Law and Practice, chapter 1 (BNA 1994). The Framers, specifically James Madison, gave the new federal Congress exclusive power to enact copyright laws primarily to ensure national unity. “The States cannot separately make effectual provision for” author’s rights, wrote Madison in the Federalist 43 about why the Copyright Clause was needed.

Since then, the federal government and the states shared the power to grant copyrights. In 1973, the Supreme Court noted, “the language of the Constitution neither explicitly precludes the States from granting copyrights nor grants such authority exclusively to the Federal Government.” 5Goldstein v. California, 412 US 546, 560. This dual system of copyright was done away with, however, when Congress passed the Copyright Act of 1976.

Under the Act:

On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright … are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State. 617 USC § 301(a).

Courts determine if a state cause of action is preempted by the Copyright Act by looking at whether the work in question is within the subject matter of copyright and whether the state claim protects rights equivalent to those protected by copyright. The state claim isn’t equivalent if it has an “extra element” — one that makes the claim qualitatively different from a copyright claim, changing the nature rather than the scope of the action.

Ideas are certainly not subject matter protected by copyright law; the question always comes down to whether a state claim contains the necessary “extra element” that would preclude it from preemption.

But Circuit courts are split on cases like Montz. As the studios point out in their cert petition, the Second and Fourth Circuits would have dismissed Montz’s state law claims under their interpretation of the Copyright Act’s preemption provision.

Not so in California and the Ninth Circuit. For over 50 years, California courts have recognized “an implied contractual right to compensation when a writer submits material to a producer with the understanding that the writer will be paid if the producer uses the concept.” 8Desny v. Wilder, 299 P.2d 257 (Cali. 1956). In 2004, the Ninth Circuit held that such claims are not preempted by the Copyright Act. 9Grosso v. Miramax Film Corp., 383 F.3d 965.

Montz v. Pilgrim Films & Television

The decision in Montz reaffirmed what the Circuit judges saw as a long-standing protection of ideas under contract law when there is a “bilateral expectation” of compensation. This promise of payment, said the court, is the “extra element” that makes contractual claims “substantially different” from copyright claims.

The court also believes its decision to protect ideas in this fashion is good policy, considering the nature of the entertainment industry. “Without such legal protection,” it said, “potentially valuable creative sources would be left with very little protection in a dog-eat-dog business.”

Pilgrim Films & Television v. Montz

The studios argue that the Supreme Court should grant its petition because the Ninth Circuit incorrectly interpreted the scope of copyright preemption, the decision further deepens the previously mentioned circuit split on preemption, and the question presented is important to maintaining national unity in copyright law.

They first note the difficulty courts have had applying the “extra element” test in preemption cases. It provides little guidance to courts, and this case is a prime example:

The Ninth Circuit’s analysis began and ended with the fact that, under California law, Montz was required to allege a “promise” to pay for his ideas. But this analysis simply highlights the danger of the “extra element” approach: The “implied agreement of payment for use of a concept” is, at least formally, an extra element, but it does not render Montz’s claims qualitatively different from a copyright infringement claim. Rather, the core of Montz’s allegations is that the defendants copied his ideas and developed derivative works based on his screenplays, videos, and other materials–and the right to prevent them from doing so is protected, if at all, only under the Copyright Act.

The studios next argue that the circuit split on this issue is largely a result of the “extra element” test — the inconsistency of its application illustrates the challenges courts face. This is a particular concern, the studios argue lastly, since the goal of preemption is to ensure consistency and uniformity in copyright law.

The studios also counter the Ninth Circuit’s policy argument, saying that its decision would actually hurt more than help those looking to get their foot in the door of the entertainment industry:

[The decision] has the potential to frustrate the public interest in obtaining fresh ideas and scripts from previously unknown writers. Even before that decision, producers were “already extremely wary about accepting unsolicited idea submissions, leaving only the slightest crack in the door for an aspiring unknown writer to get through.” But to avoid potential liability, producers are now forced to “pull the door shut entirely, leaving unknown writers with even less bargaining power than they had before.” Because of “fear that [they] could unintentionally enter into an implied contract with the screenwriter,” studios have “limit[ed]” their “willingness … to consider unsolicited ideas or pitches.”

Will the Supreme Court grant the petition? Only time will tell. The Court grants only a tiny percentage of all petitions filed. The fact that the Court hasn’t dealt with an issue relating to the Copyright Act’s preemption provision raises the chances, as does the fact that there’s a Circuit split on this question. The petition is also likely to attract a lot of attention — both the MPAA and the major television networks filed amici briefs when the 9th Circuit heard the case.

The facts in each are widely disparate. However, there are legal issues common to both, and in each case copyright and federal preemption was rejected.

WIAA is particularly interesting given its discussion of federal jurisdiction and the head scratching “what right, specifically, did the court rely upon in determining that a license could be granted?” It seems the court did assume such a right existed, but was not the paragon of clarity in describing what that right comprises.

This is a very interesting case, because it directly addresses one of the key arguments in favor of strong IP protection: the notion that, without it, there’s nothing to prevent a large producer from exploiting a smaller producer’s creative work without fairly compensating that smaller producer. For example, just as we see here, a guy pitches an idea to a movie studio, and they use that idea without paying him “because you can’t own an idea“

There is nothing preventing a large producer from screwing over the small producer’s creative works now. The amount of money it takes to successfully carry out a suit against a large business makes it prohibitive and in return the costs of defending yourself (its civil so you don’t get a lawyer appointed to you) if a major studio thinks that they can strip a few pennies off you is so high that its cheaper to just pay a settlement.

“the legal system is too expensive” is an argument that you can make about anything ever.

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About

Copyhype provides news and info on current developments relating to copyright law, the media industries, and the digital economy. It cuts through the hype to bring reasoned discussion aimed at both legal and nonlegal audiences.

Terry Hart is currently VP Legal Policy and Copyright Counsel at the Copyright Alliance. Any opinions expressed on this site remain his own and not necessarily those of his present or any past employers.